And while the terms are similar, a co-borrower — or joint applicant — shares ownership of the loan and assumes responsibility for payments from the start. On the other hand, a co-signer is only liable for the loan if the primary borrower fails to make payments.
A co-signer agrees, without having any ownership interest in the home, to strengthen your mortgage application by letting the lender consider their finances and promising to pay back the loan if you default. A co-borrower helps strengthen your mortgage application while also having ownership interest in the property.
A co-borrower is any additional borrower whose name appears on loan documents and whose income and credit history are used to qualify for the loan. Under this arrangement, all parties involved have an obligation to repay the loan. For mortgages, the names of applicable co-borrowers also appear on the property's title.
Cosigners are people who guarantee debt for someone who cannot qualify for a loan on their own. The understanding is that the primary borrower is the person legally responsible for repaying what is owed. Co-borrowers, on the other hand, are people who want to take on a shared debt with another person.
Both parties become co-credit applicants, taking on the financial risk of the mortgage together. This means the co-borrower essentially owns the house too, whether they live in it or not.
You're in it for the long haul.
Since you and your co-borrower typically own the title to the home and share responsibility for the mortgage repayment, a split may create legal issues. Take your time to determine whether you want to share this responsibility with your co-borrower for the loan haul.
A co-borrower is a co-owner of the property. The co-borrowers name would be on the title of the home, right alongside yours. Beyond having their name on the title, co-borrowers' assets, credit history, employment history, and debts are assessed as they are also applying for the home loan with you.
Since the borrower and co-borrower are equally responsible for the mortgage payments and both may have a claim to the property, the simple answer is that it likely doesn't matter. In most cases, a co-borrower is simply someone who appears on the loan documents in addition to the borrower.
Will I have ownership of the property if I cosign? No, you will not take on ownership if you're only a mortgage cosigner and not an actual co-borrower. As a cosigner, you're only guaranteeing the loan payment. Your name will not be on the title to the property.
Co-signers have no ownership stake, but they still put their credit on the line. If you're applying for a loan but struggling to qualify, you might benefit from a co-signer or co-borrower.
A co-borrower, sometimes called a co-applicant or joint applicant, is a person who shares responsibility for repaying a loan with another person — and who has access to the loan funds. Applying for a loan with a co-borrower reassures the lender that multiple sources of income can go toward repayment.
Key Takeaways. Your best option to get your name off a large cosigned loan is to have the person who's using the money refinance the loan without your name on the new loan. Another option is to help the borrower improve their credit history.
Rights of co-borrowers
Each person owns a percentage of the property based on how much money she invests. All areas of the property are accessible to each individual. Also, each owner decides who receives her share of the property when she dies.
Lenders can consider the credit scores of both borrowers when co-signing an auto loan. If you have a lower credit score, having a co-signer with a higher score could work in your favor. In terms of which credit-scoring model is used for approvals, that can vary by lender.
Since co-borrowers are both liable for the debt, any past-due payments have the potential to hurt both parties' credit scores. Then again, on-time payments can help boost both borrowers' credit scores. Most often, a co-borrower will have shared ownership of the funds or asset purchased with the loan.
Normally, a cosigner will have to stay on the mortgage for a minimum of one year. From my experience, normally a cosigner will stay on a mortgage for several years. When the borrower is ready to have the cosigner removed, they contact the lender to then re-qualify without the cosigner.
As a co-signer, you're agreeing to take responsibility for the loan if the primary borrower fails to make payments. If the primary borrower misses multiple payments, you can easily become responsible for 100% of the loan value.
The answer is no, the cosigner has no legal right to take possession of the car. As a cosigner, you don't have legal ownership rights to the vehicle. In other words, a cosigner is on the vehicle's note (making them liable for the payments) but not the car title (which indicates ownership).
Keep in mind that it's best if your co-borrower has good credit. If the co-borrower on your loan application has a low credit score, you might qualify for less favorable terms than you could have gotten on your own. And if a co-borrower's credit is bad enough, you might be rejected altogether.
You can file an action in small claims court (in some states such as Georgia this is the Magistrate's Court) to recover any amount you have to pay on the borrower's debt, plus court costs. If you succeed, you may be able to recover some or all of your loss.
It is possible for a homebuyer to be named on the title and not the mortgage. There are several reasons why someone may choose to do so; for example, a homeowner may not want to be on the mortgage if they have an adverse credit history from a low credit score or a past bankruptcy.
If Your Name Is in the Mortgage but Not the Deed
In this scenario, you have all the liability of having a mortgage named after you while none of the benefits of having an ownership stake in the property. Having only one name on the deed can also present an issue in terms of inheritance.
Having a co-borrower has many advantages. For one, it can allow you, as the borrower, to qualify for a larger loan amount since both the borrower and the co-borrower's income, assets, and credit histories are factored in.